MHPA formalises electricity export

August 16 | Kuensel
By Phub Dem

The Mangdechhu Hydroelectric Project Authority (MHPA) will start billing its revenue from India by the end of this month.

The signing of power purchase agreement (PPA) took place yesterday in Thimphu between Druk Green Power Corporation Limited (DGPC) and Power Trading Corporation of India Limited (PTC). A PPA is the principal agreement that defines the revenue and credit quality of a generating project and a key instrument of project finance.

Managing director of DGPC, Dasho Chhewang Rinzin, who is the signatory to the PPA from Bhutan, said that although the project was yet to be taken over by the government and handed over to DGPC for operation and maintenance, the PPA formalises the flow of funds from the sale of electricity to India. The chairman and managing director, PTC India Limited, Deepak Amitabh counter signed the PPA.

The commissioning of MHPA will increase Bhutan’s power generation capacity by more than 40 percent, from around 1600MW.

The existing power power plant generates 7B units, of which 5B units of surplus power are exported to India. Mangdechhu is expected to generate another 3B unit, bringing additional revenue of Nu 12B annually.

“This is almost 100 percent of what DGPC earns today from the sale of power from Tala, Chukha and Kurichhu all together,” said Dasho Chhewang Rinzin. The tariff for Kurichhu and Tala is around Nu 2.12 and Chhukha is Nu 2.55.

MHPA will earn about Nu 4.12 a unit, double the existing cost. “The revenue generation will be huge. There will be some reduction in gross revenue with an increase in domestic consumption, but that won’t make a huge difference,” said Dasho Chhewang Rinzin.

Three of the four generating units, each capable of producing 180MW were already generating electricity. The remaining one unit will be commissioned today. The plant has already exported 550MW of power.

Economic affairs minister, Loknath Sharma, said that the MHPA was commissioned on time with record cost per MW, making it as one of the most cost-effective projects in the region.

MHPA will be officially inaugurated on August 17 by the prime minister of India, Narendra Modi.

Mangdechhu is expected to generate another 3B unit, bringing additional revenue of Nu 12B annually
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